Allergan suit accuses insider trading

MONTREAL — Botox maker Allergan has launched a U.S. lawsuit that accuses Valeant Pharmaceuticals and Pershing Square Capital of using fraud and insider trading to further their hostile takeover attempt of the California-based drug company.

They responded that Allergan’s allegations are baseless and an attempt to stop Pershing Square’s efforts to replace six members of the Allergan board, which has rejected Valeant’s takeover bid.

The suit, filed Friday in a U.S. district court in central California, claims that New York-based Pershing Square and Valeant circumvented insider trading laws and violated Securities Exchange Commission rules by quietly working together to mount a $50-billion acquisition bid by Valeant, based in Laval, Que., near Montreal.

Allergan said debt-laden Valeant didn’t have the money to make such a large acquisition, so it sought third-party financing assistance from Pershing Square.